How to Sell a Car: Avoid the Consignment Scam

How to Sell a Car: Advice from Peter Humleker

For some important advice on how to sell a car, we asked Peter Humleker, consumer advocate, consultant and author of the excellent book “Car Buying Scams, Auto Dealer Executive “Breaks Code of Silence!” to write an exclusive article for us about how to sell a car.

Peter told us that one of the most important traps to avoid for how to sell a car are consignment scams.

Here’s Peter’s article on consignment scams:

If you’ve been thinking about how to sell a car, one option is to consign your used car to a car dealer and let them sell it for you. Many people think this is a great approach for how to sell a car.

If your willing to take what the dealer will give you for your car, then perhaps it’s not a bad idea.

If you’re not familiar with how consigning your car to a dealer works as a method of how to sell a car, I’ll explain it to you. Then, I will tell how some car dealers may try to scam you.

How to Sell a Car: Consignment

You take your car to dealership and tell them you would like to consign your car for them to sell. Some car dealers do not consign cars, while some do.

For those who do, they look consignment as having an extra car on the lot that is not costing them any money.

The dealer will ask you how much you want for your car. No matter what you say, they will tell you that the amount you stated is too much, and then offer you a much lower figure.

Once you agree on the figure, for example $7,000, then whatever the dealership sells your car for over the amount of $7,000 is theirs to keep.

When they sell the car, they call you up and then you come into the dealership to sign some paperwork. They then give you a check for your $7,000.

How to Sell a Car: How the Consignment Scam Works

Let’s say that the dealership does end up selling your car for $9,000. They would make $2,000 profit on this deal because they owe you $7,000.

Immediately after they sell your car for $9,000, they call you up on the phone and have the following conversation with you:

“Hi Joe, this is Larry the Sales Manager at ABC Car Dealership where your car is consigned.”

Joe replies, “Hi Larry, did you sell my car yet?”

“Well, you see Joe, that is the reason I am calling. I have an offer on your car but your not going to like it. A customer is offering us $7,000 for your car. As you know, I need to make a small profit plus pay the salesman his commission.
If you could accept $6,500 for your car then we would go ahead and sell it to the customer for you that made the offer.” (Larry is saying this in his “concerned voice.”)

Joe, wanting to get rid of his car and be done with it, agrees to lose an additional $500 in order to sell his car — and the dealership just picked up another $500 additional profit — to make a total profit of $2,500.

To avoid getting ripped off this way, always stick to your original consignment amount. The worse case scenario if the dealership does call to try and run this scam on you, is to ask to see the signed purchase order from the new owner of the car.

This will tell you exactly what they paid for the car. If the dealership gets nervous and does not agree to show you the customers purchase order, then you know that they are trying to run this scam on you.

That’s how to sell a car without getting scammed by the consignment scam.

Click here to read about Peter’s excellent book on how to sell a car — as well as how to buy a car — including lots of ‘insider’ information on how to avoid getting ripped off and instead, get a great deal.

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